Loan Changes Coming to FHA

There are a few changes coming early this year that will
impact specific real estate markets or price points across the Bay Area.  Yesterday’s WSJ reported that the FHA
(a type of government-backed loan program) is running short of their reserves
so they intend to increase their loan placement fee to 2.25% (from the current
1.75%).

What does this mean? 
If you get an FHA loan, you will need to pay a higher fee to “buy” the
loan.  For a typical $500k house
with only 10% down, your loan fee just went up to $10,125 from $7,875.  It is probably not enough to crash the
housing market, but it will price some buyers out who will have to delay their
purchase.

Recommendation: If you are likely to use an FHA loan —
meaning you have less than 20% for a down payment or you have credit issues
that make a conventional loan rate very high, then I would say you should move
quickly to find the right house and get an offer accepted before FHA fees go
up.

-Mark

[Deal of the week] Home Business Opportunity

Here is an opportunity you need
to see if you have (or are thinking of starting) your own home-based business.  It’s on Meridian Ave in Willow Glen San
Jose, a pretty busy street and easy to advertise your business/service to
thousands of cars that go by each day. 
It was basically a single family home that was converted into a 1-
bedroom home with the rest used for the home-business — but it was completely
remodeled!  New kitchen, floors,
recessed lighting, stamped concrete walkway and driveway, landscaping with
sprinklers — it’s all brand new and ready to go.

Details:

1260 Meridian Ave, San Jose, CA
95125

MLS #80955769

1 Bedrooms, 2 Bathrooms

1688sf living space

7200 sf lot

List Price: $549,000

Why is it a good deal?

It was bought for $1.07M just 2
years ago, now it is a foreclosure. 
It is an undiscovered listing because it is shows up as a 1 bedroom 2
bath home in almost 1700sf.  Most
buyer and agent search patterns will overlook this kind of home.  It needs a special buyer willing to
live on a busy street and if it fits your needs, you will get a great deal.

What is the risk?

It may be hard to resell in the
future as it will need another special buyer.  However, maybe you can sell it with your business once a
name is established.  If you can
get it re-zoned for retail/commercial it may increase the value as well.

Who is the best buyer?

Daycare center would be perfect
— easy drop off and pickup right at the sidewalk, yoga instructor, dentist, chiropractor,
insurance agent, healthcare professional working in connection to the Indian
Wellness Center across the street. 
What else can you think of?

Call me if you are looking for
this kind of space to run or start your home-based business.

-Mark